This checklist outlines the most important variables specific to landscaping companies that will make your business a good catch in the marketplace. Some of the variables are the same for all industry types.
Staff:
Build a management team - Your business is more valuable if you are not the chief cook and bottle washer.
If you have management / supervisory staff in place to run daily operations, your business will be much easier to sell.
Document your workers - Some buyers, whether individuals or other companies, may be ok with undocumented workers, others may not. You are in the best position if you can document all of your workers.
Improve retention of employees - Focus on developing programs that will foster long-term retention of your employees. Finding and keeping a steady workforce is a perennial problem in the industry. Your business will stick out in the crowd if you have a stable team.
Customers:
Sign contracts with your client base - Yes, it is a hurdle, but it is worth the effort. Recurring, predictable revenue is the holy grail of revenue streams. Buyers love a steady customer base, especially if you have long-term contracts. Check with your attorney to ensure contracts are transferable to the buyer in the event of a sale.
Clean up your accounts receivable - Having too much cash tied up in A/R may lower your company's valuation. Sophisticated buyers consider this a drag on the company's growth. The longer the cash-flow cycle of your company, the more working capital a buyer must tie up in the business. You may want to talk with your late-paying customers, train them to pay on time or pre-bill them.
Polish up your billing methods - Pre-billing is ideal and increases the valuation of your company. Try to get as much of your client base as possible on pre-billed arrangements.
Build your commercial base - Landscaping contractors that focus on commercial work have much more value to buyers than those that primarily focus on residential business. However, commercial entities try to negotiate lower prices, which will cut into your profits.
Watch your margins.
Operations:
Focus on maintenance and other repeat services - Lawn care and landscape maintenance companies receive higher multiples than construction-related landscaping businesses.
Update your fleet and equipment - Buyers do not want to inherit a backlog of maintenance problems or equipment costs.
The price goes down in the buyer's eyes while he's calculating what it would cost to bring the fleet up to date and to replace/repair equipment.
Keep your vehicles and equipment in tip top shape.
You will be in a better negotiating position.
Build dense routes - Dense routes minimize fuel, labor and other expenses, which will increase the value of your company.
Develop other services to mitigate the impact of seasonality.
Don't be an owner-driven operation. Build your business so anyone can run it. The more important you are to your business, the less your business will be worth. Additionally, building your company so anyone can run it vastly opens up the universe of buyers that can purchase the business.
Document and streamline your operations - Streamlining your operations and documenting procedures is like an instruction manual. It provides a smoother transition for a buyer.
Management Software - Talk about the holy grail! Online operations are becoming a must these days. For good reason. These programs are becoming the de facto operations manual. You can boost field service efficiency in scheduling and routing, GPS crew tracking and timesheets, handle quotes, manage customer data, manage billing, and more....on your laptop....wherever you go.
Texas Economic News
